Tax Help for Wholesaling

2 Replies

Hi, I've completed my first 3 deals in 2015 as a wholesaler. I'm excited, but I'm trying to be cautious as well. I have not formed an LLC quite yet, but it's happening later this week. So 2 questions : 1) To tax my assignment fee properly what should I do? As of right now I am signing on to IRS.gov and making estimated payments of 18% for each deal I've done. 2) As far as my direct marketing, business lunches, supplies, gas and whatnot I am keeping receipts for everything. I incurred a lot of costs in 2014 but didn't start making money until this year. Can I carry all of this forward as start up costs for next year's taxes? And will it be separated from the LLC that I am forming when tax filing season comes along? Any help would be greatly appreciated.

Hey James,

I'm searching "wholesale assignment tax" and your post came up. 

I just got a check for an assignment fee, no LLC yet. I do plan on doing that ASAP though. What I want to do is put 2/3 back into REI through the LLC and split the remaining 1/3 with my brother for personal use.

How did your question play out, and based on that what would you recommend I do?

Thanks!

@James Rodgers

I am not sure how your business is set up.  Do you and your brother have a partnership arrangement?  If you do, you could take the 1/3 and split it between your brother and you based upon your partnership agreement.  If you do not have a partnership agreement and the assignment check was made out to you, you will have to 1099 your brother for his portion or you could end up paying the taxes on it.

Your assignment fee will be taxed as ordinary income and could be subject to SE tax.

It's hard to provide specific advice without knowing your whole financial situation, but I can recommend that you save some of the proceeds in a separate account for taxes.

Let me know if I can be of any further assistance.

Good luck on your journey and I hope this helps.

Ed

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